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Annual USTR Report on Trade Barriers to Telecom Services and Equipment

Thursday, April 04, 2013
By Shawn McCausland
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative released April 3 its annual review of the operation and effectiveness of telecommunications trade agreements. Acting USTR Demetrios Marantis said that since the release of the 2012 report progress has been made in Canada and Mexico, where action has been taken to remove foreign investment limits in those countries’ telecom sectors, and Israel, which signed a bilateral telecom equipment mutual recognition agreement with the U.S. last fall. On the other hand, new areas of concern include Brazil’s finalization of local content and technology requirements on new mobile wireless licensees and Pakistan’s institution of a restrictive regime for the termination of international calls that remains in force despite being challenged by Pakistani competition authorities.

Other issues discussed in the 2013 report include the following. USTR acknowledges that several of these issues have been discussed in previous years but believes it is appropriate to continue to raise these issues and encourage trading partners to implement appropriate solutions. USTR will continue to monitor these practices and measures and “may take further action” if warranted.

- restrictions on cross-border data flows and Internet-enabled trade in services

- the importance of regulatory impartiality generally as a precondition to meaningful market access and specific issues encountered in China

- foreign investment limits, typically in the form of limits on the percentage of equity a foreign firm can control, with a focus on restrictions in China

- problems that competitive carriers are encountering in China, Colombia and Mexico

- increases in the rates foreign telecom companies charge U.S. carriers to terminate (i.e., deliver) long-distance calls to customers in those countries, with a particular focus on problems in El Salvador, Ghana and Jamaica

- impediments U.S. satellite operators face when seeking to serve customers in China and India, including the requirement to sell satellite capacity exclusively through government-owned suppliers

- positive steps India took in 2012 to improve access to its submarine cable landing stations along with the need for India to consider a methodology to eliminate unjustified costs imposed on suppliers

- localization barriers to trade (which are designed to protect, favor or stimulate domestic goods and services at the expense of imports) in Brazil, India and Indonesia

- equipment standards and conformity assessment procedures that act as barriers to entry for U.S. telecom equipment, including policies in China (onerous security requirements, including use of an indigenous encryption algorithm, redundant testing and non-transparent technical requirements), India (onerous security requirements for the importation of telecom network equipment), and China, Brazil, Costa Rica and India (mandatory certification requirements and requirements for local testing)

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